My First Commercial Real Estate Deal Left A Lasting Impression
My First Commercial Real Estate Deal Left A Lasting Impression
By Natan Jacobs | Vestis Group
February 20, 2014
Natan Jacobs is Principal and Designated Broker of Vestis Group in Phoenix, AZ. Jacobs co-founded Vestis Group in 2008. The company specializes in the brokerage, management and investment of multifamily properties in Phoenix, Arizona.
I began my commercial real estate career in 2001 while still attending Arizona State University, as an assistant to a top industrial broker. I was one of several licensed assistants in the office and my job was to canvass neighborhoods, make cold calls, run errands and get coffee for everyone on the team. The first commercial deal I completed by myself from start to finish was a 10-unit apartment community in north central Phoenix called Aztec Apartments. It was 2003, and I was working at my first job out of college as an Acquisitions Coordinator for a boutique redevelopment company specializing in condo-conversions.
I had just finished researching all the condo-mapped apartment communities in Maricopa County and was starting to drive by each property on the list to get a better feel for the neighborhoods in which they were located. I did my research “on the clock” and my driving was all done on my own time. Aztec was one of the first properties on my list and was located near another project previously completed by my company, so I decided to drive by and take some pictures on my lunch break.
When I got to the property I could see that it was in desperate need of repair. I could see broken windows, peeling paint, a broken fence, holes in the asphalt parking lot and an old car on blocks in one of the parking spaces. I took pictures of the good, bad and ugly and headed back to the office. When I returned to the office, I called the only number I could find listed for the owner of the property. Surprisingly, the owner answered on the second ring. I barely introduced myself before the voice on the other side of the phone said, “I’m not interested in listing with a broker. Good bye!” That didn’t phase me, so I decided to give him a quick call back. This time, when the owner answered, I quickly let him know that I was not looking for a listing to market the building for sale, but rather I was the buyer and would pay cash for his property, if he was willing to entertain an offer. There was a long pause and finally he said that he would consider an offer, but he wanted to meet me first. He said he was retired and lived onsite in unit 1 and to stop by whenever. I filled my boss in on what had happened so far and I could tell that he was pleased with the progress so far. We ran the numbers and agreed on an initial offer price and he let me know how much room we had to negotiate. He said he liked my initiative and to keep going.
When I arrived at the door for unit 1, I noticed there was no door bell and could hear what sounded like a TV on, so I knocked pretty hard. The owner answered and invited me in. As I walked in, I was immediately struck by the intense smell of cigarettes and could see dozens of ashtrays all over the living room, all overflowing with burned out cigarettes. The owner asked, “Well, what’s your offer?” I explained that our company’s mission was to provide affordable housing to first-time homebuyers and that we were interested in his building because of the location and the fact that it was legally a condominium with 10 separate parcels. I told him that we would put a lot of money into the project to renovate the interiors and exterior and that we would market the individual units for sale to owner-occupants, not investors. I then handed him our written offer and he stared at it closely. He said, “I could probably go for something like this.” He then stood up and left the room. When he came back, he handed me a stack of papers and asked me what they meant.
The stack of papers consisted of several letters from a local attorney. It turned out that three of the parcels, but not all, had outstanding tax liens and the attorney was ready to foreclose. I told the owner that I could not give him legal advice, but that he should seek legal counsel right away. I called his attention to the foreclosure date listed on the letter, which was less than 30 days away. The owner told me that he didn’t want to deal with it and would just move in with family if he indeed lost the property. I asked if I could contact the attorney to see about postponing the foreclosure so that we could purchase the property and pay off his old tax liens and he gave me the green light. When I contacted the attorney, I explained to him what was going on and asked for him to postpone the foreclosure. I also explained that he was only foreclosing on 3 individual condos, not a 10-unit apartment building and I emailed him the pictures I had taken. The attorney gave us 30 days to consummate a deal and that was all we needed.
We closed the deal inside three weeks while my boss was on vacation. My takeaway from the closing was that everyone involved got what they wanted. We got to acquire the property, the seller got rid of a headache, and the attorney got his tax liens paid off with interest. Aztec will always be important to me as it taught me that persistence pays off and the best deals are when everyone wins.
About Vestis Group
Vestis Group is a leading Multi Family Investment sales and Advisory Services firm with a proven track-record of providing value added brokerage services coupled with innovative and ongoing real estate investment strategies.
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